The Dr Reddy's effect: Pharma companies need a lifestyle change

The warning letter dated November 5th that the US Food and Drug Administration (USFDA) sent to Dr Reddy's Chairman Satish Reddy, which is now in the public domain, should come as an eye opener to both the company and to the pharma industry as a whole. The letter points to some shocking errors, many of them avoidable by a vigilant organisation.

"If you look at all the warning letters issued over the past one year, most of the faults which have been reported are correctable and therefore, this is a wake-up call to the CEOs of not just Indian but also global pharma companies to look at the organisational culture and initiate actions to bring about lifestyle changes within the organisation," says D.G. Shah, Secretary General of the Indian Pharmaceutical Alliance.

Explaining the element of lifestyle, he says, "Change the way you look at risk and safety. That outlook has to change completely." Or, very simply, changing the whole approach to quality consciousness in medicine-making. But then, he hastens to add, it is an issue that all global pharma companies including some of the leading global MNCs will need to address as they have been pulled up by the US regulator too at different points in time.

As for Dr Reddy's, most within the industry and from the analyst community have been shocked by some of the observations made by the FDA. One is still not sure if these could be called avoidable execution errors or if there are some serious internal flaws or people issues that need urgent correction. The key point is it is a matter of grave concern for the company and the FDA can come down seriously if there is a hint of any issue that questions data integrity. As one leading pharma analyst based in Mumbai told Business Today: "The clear message to pharma companies now is, there is no room for short cuts and they must focus more and more on automation of the facilities to reduce human intervention and capture data more through digitisation and automation."

Consider some of the observations in the Dr Reddy's case and the questions they raise:

One of the observations in the warning letter says: "During the inspection, the presence of an uncontrolled "Custom QC laboratory" (CQC) was discovered by our inspection team. The existence of this laboratory was previously unknown to FDA. Your QC Associate Director acknowledged that the CQC laboratory was involved in CGMP analysis of APIs intended for export to the United States through 2012." So, was this an avoidable error? For if the approach is to not conceal and reveal all, as the official did, then how did this basic disclosure issue come up?

The letter points to multiple responses given by the company following the observations for the three facilities. It says: "We reviewed your firm's responses of December 15, 2014, February 19, 2015, and March 27, 2015. We note that they lack sufficient corrective actions. We received your additional correspondence of January 31, April 9, May 13, May 21, July 14, and September 14, 2015." So, as is apparent, the remedial measures suggested by the company were not found to be good enough. So, where were the mistakes and what is it that is consistently been missed in the response?

Another observation: "During the filling operation, our investigator observed an operator repeatedly using forceps ....the operator intervened....because the conveyor belt was not operational, an operator manually intervened." So, to what extent are the faults around execution errors?

For instance, read the above observation on the conveyor belt not operational along with some broad buckets under which the regulator lists its findings (given below) and calling them as failures to:

• Maintain complete data derived from all laboratory tests conducted to ensure compliance with established specifications and standards.
• Prevent unauthorised access or changes to data, and to provide adequate controls to prevent omission of data.
• Record activities at the time they are performed.
• Control the issuance, revision, superseding and withdrawal of all documents with maintenance of revision histories.
• Adequately investigate out-of-specification results and implement appropriate corrective actions.
• Maintain all quality-related documents appropriately.
• Prevent unauthorised access or changes to data.
• Identify storage containers for intermediates in batch production records.

Will the company address these and other observations in a foolproof manner by December 7th? It better. For failure to do so could lead to the regulator imposing an import ban, which neither the company, industry nor the bourses would want. Already, on Thursday, November 26th, the Dr Reddy's stock on the Bombay Stock Exchange was down 8.21 per cent and closed at Rs 3,110.35.